FT nEfiDE 
GenColl } 






A STATISTICAL STUDY OF 

LIFE INSURANCE 

FOR A DECADE 


BY 


Benjamin F. 


Brown 


m 


o 


1 











































WASTE AND GAIN 


STATISTICAL STUDY OF LIFE INSURANCE 

FOR A DECADE 


Includes comparative Waste and Gain of each of twenty-five leading Companies lor 
two five-year periods in the decade from 1893 to 1902 inclusive; also 
comparative business stability of each company for the 
same periods: together with individual show¬ 
ings for the year 1902 and aggregate 
showings of all companies 
for the ten-year 

J 

period . . . .= 


.. « , • « 


• * « C 0 100 


* « * I • « • 

••• . *. 


V 




By BENJAMIN F. BROWN 


COPYRIGHTED 1903 

EDITION LIMITED TO ONE HUNDRED COPIES 


PUBLISHED BY 

THE JOURNAL OF INSURANCE ECONOMICS 

BOSTON, MASS. 














LIBRARY of CONGRESS 
Two Copies Received 

DEC 28 1903 

Copyright Entry 

ctxs's “ XXc. No. 
-> 2 * l=» 

COPY B 

















INTRODUCTORY 


T^ROM the standpoint of conditions affecting business and industrial prog¬ 
ress and the public weal the decade 1893-1902 may be said to have been 
divided into two substantially equal periods, the earlier, needless to recall, 
being one of widespread commercial and financial depression, the later a 
period of unprecedented prosperity — during which business in all parts of 
the country more than recovered its lost ground. Having in mind the marked 
distinction between the two periods as above set forth it became with the 
writer an interesting question as to what extent the business of life-insurance 
had been affected for worse or better under conditions so widely diverse. 
This consideration, together with the fact that the last five years had witnessed 
the adoption on the part of nearly all companies of many liberal features not 
previously contained in their contracts, led to the preparation of the accom- 
paming tables in the belief that a distinctive grouping of the statistics of new 
business, waste and gain for the respective periods could hardly fail to be of 
interest and value to those especially concerned in the administration of com¬ 
pany affairs. 

****** 

Dealing only with essential features the following is a brief summary of 
what is shown in Table I : 

Comparison of footings in the first division shows an increase of $765,682,- 
000 (20.9 per cent) in the new issues of the second (initial) period, with a 
decrease of $293,997,000 (12.4 per cent) in terminations, the latter represent¬ 
ing a pro rata reduction of $176 (27.6 per cent) per 1,000 of new issues; 
denoting altogether a net relative improvement of 38 per cent. 

This considerable reduction in terminations, it will be observed, is made 
up by a decrease of $256,000,000 in lapses, $180,933,000 in surrenders, and 
$21,000,000 in changed and decreased policies, the total of $458,000,000 being 
reduced to above figure by an increase of $164,000,000 in terminations by ex¬ 
piry. As regards the latter the figures show that anything above a normal 
increase is confined to three or at most four companies, while on the other 
hand as many as ten companies show an actual decrease. The increase in 
the exceptional cases foots up about $176,000,000, due mainly of course to the 
transfer to term and subsequent expiry of lapsed life and endowment policies 
under the extended insurance provision. 

It may be stated incidentally in this connection that of the twenty-five 
companies included in the exhibit ten make this provision automatic, fourteen 
require written request and one allows paid-up insurance only. 

On the whole the showing in the expiry column would seem to indicate 
either that a majority of the companies are as yet without any considerable 
accession to the term class by reason of lapsed policies, or else prefer to 
account terminations in this category as lapses proper. 

As a whole this section calls for and will doubtless receive thoughtful 
attention, each of the several columns presenting its own peculiar features of 
interest and instructiveness. 

****** 


Passing to the second division comparison of first column totals shows for 
the period i898-’o 2 inclusive, an increase of $1,253,844,000 (34.5 per cent) 
in new issues and of no less than $1,383,064,000 (158 per cent) in gain of in¬ 
surance, as compared with the earlier period. The total gain, $2,259,031,000, 
represents a pro rata gain of $463 per $1,000 of new issues as against $241 for 
the five years preceding, the difference of $222 signifying a net relative im¬ 
provement of 92 per cent. In this percentage, be it noted, is definitely 
summed up and expressed the actual net difference in business results as be¬ 
tween the two periods, including and covering on the one hand all increase 
in new business, with gain therefrom, on the other all decrease in termina¬ 
tions from whatever cause. 

****** 

Before discussing the third and final division a word of explanation is 
due as regards the ratio of ‘ ‘ size ’ ’ in the second column and the significance 
of its relation to those which follow. 

It will I think be conceded that a ratio purporting to show the percent¬ 
age of gain to new business in different companies is necessarily incomplete 
and void of special significance unless considered in connection with the 
relatively greater or lesser volume of the contributing new issues in each par¬ 
ticular case. The following will illustrate : 

Given : Companies A and B, each having $100,000,000 in force at beginning of the 
year. 

A writes $20,000,000 of new business, B $10,000,000. 

At the year’s close A has gained $10,000,000, B $5,000,000, being in each case 50 per 
cent of new issues. 

Per contra, A has terminated $10,000,000 of old business, B $5,000,000: 

From which it will be seen that in order to show an equal percentage of gain to new 
issues A has had to sell (or buy?) double B’s volume, or $200 to $100 per 1,000 of old in 
force. 

Finally; A writing B’s volume only would have gained nothing, while B writing A’s 
would have gained $15,000,000, or 75 per cent of new issues. 

The illustration is admittedly extreme but serves to demonstrate the 
proposition, while at the same time explaining the reason for being of the 
ratio in question. By its use as a divisor the ratio of gain is reduced to its 
proper relative value in the case of each individual company; while by divid- 
ing the ratio so obtained by the average (mean) of all companies* we obtain 
in the final analysis a percentage accurately defining the status of the indi¬ 
vidual company in respect of gain from new issues and incidentally an ex¬ 
pression of the comparative stability or staying quality of its business. 

All of which is submitted in good faith and without prejudice for the in¬ 
formation and behoof of those it may especially concern. 

BENJAMIN F. BROWN. 

Ashmont, Boston, Nov., 1903. 


* Please note particularly in this connection the difference in mean divisors of the two periods (151 and 
275 respectively) as accounting for apparently adverse changes in some of the last column percentages of 
the later period. 





Twenty-Five 

Companies 



iETNA. 

Berkshire. 

Connecticut General. 
Connecticut Mutual . 

Equitable. 

Germanla. 

Home. 

Manhattan. 

Massachusetts Mutual 

Mutual. 

Mutual Benefit.... 

National. 

New England Mutual 

New York. 

Northwestern Mutual 

Penn Mutual. 

Phojnix Mutual. 

Provident L. and T. 
Provident Savings-. 
State Mutual. 

Travelers’. 

Union Central. 

Union Mutual. 

United States. 

Washington. 


1897 

1902 

1897 

1902 

1897 

1902 

1897 

1902 

1897 

1902 

1897 

1902 

1897 

1902 

1897 

1902 

1897 

1902 

1897 

1902 

1897 

1902 

1897 

1902 

1897 

1902 

1897 

1902 

1897 

1902 

1897 

1902 

1897 

1902 

1897 

1902 

1897 

1902 

1897 

1902 

1897 

1902 

1897 

1902 

1897 

1902 

1897 

1902 

1897 

1902 


Grand Totals 


f1893-1897 
_j 1898-1902 

{ 1893-1902 


Table I: — Study of Business Waste and Gain as experienced in the two Five-Year Periods of the Decade 1893-1902; 
with Deductions expressing the Varying Degrees of Gain and Business Stability in the several Companies. 


[Copyright, 1903 , Benjamin F. Brown.] 




Terminations Other Than by Death and Maturity. 

Gross New 
Business Paid 
for in Five- 
Year Periods 
beginning 
Jan. 1 , 1892 , 
Jan. 1 , 1897 . 

By 

Expiry. 

By 

Surrender. 

By 

Iyapse. 

By Change 
and Decrease 

Total 

Terminations 
in Five-Year 
Periods ending 
Dec. 31 , 1897 , 
Dec. 31 , 1902 . 

$ 


$ 

$ 

$ 

S 

89,537,200 

8,469,258 

11,649,498 

31,477,028 

3,142,086 

54,737,870 

113,167,200 

2,398,500 

8,933,451 

25,858,699 

2,596,170 

39,786,820 

32,093,200 

120,700 

7,291,393 

7,039,869 

10,900,781 

10,500 

18,323,374 

31,218,900 

98,000 

7,862,396 


14,990,265 

7,719,400 

59,000 

1,341,926 

2,621,179 

363,506 

4,385,611 

12,853,100 

60,500 

1,817,282 

3,130,657 

652,175 

5,660,614 

51,698,400 


7,440,038 

14,421,025 

6,350,155 

28,211,218 

49,058,000 

5,332 

7,566,525 

8,619,663 

3,392,860 

19,584,380 

650,218,400 

3,679,971 

183,977,337 

248,523,282 

13,470,983 

449,651,573 

725,349,700 

18,673,908 

128,105,874 

228,119,126 

3,239,796 

378,138,704 

46,795,000 

398,620 

8,435,392 

18,337,497 

2,248,419 

29,419,928 

49,049,800 

336,220 

6,988,086 

14,608,088 

1,111,055 

23,043,449 

43,061,900 

2,500 

9,043,842 

20,481,388 

1,313,125 

30,840,855 

41,663,000 

83,000 

5,172,947 

14,709,168 

904,965 

20,870,080 

46,406,300 

220,256 

4,393,690 

28,854,449 

7,072,110 

40,540,505 

36,601,700 

203,997 

3,957,203 

18,066,484 

2,526,144 

24,763,828 

79,474,000 

368,950 

14,521,142 

20,891,731 

6,733,601 

41,515,424 

88,487,100 

170,400 

11,646,084 

19,046,341 

5,047,190 

35,910,015 

746,017,400 

3,826,546 

147,049,800 

305,472,049 

21,547,534 

477,895,929 

815,374,800 

4,257,157 

56,829,858 

292,408,443 

22,131,928 

375,627,386 

134,750,500 

104,092,600 

13,411,013 

14,037,697 

41,999,471 

34,539,696 

24,160,425 

18,795,037 

2,844,021 

79,570,909 

70,216,451 

60,778,500 

780,100 

15,559,058 

19,812,502 

1,698,317 

37,849,977 

70,236,300 

987,023 

12,789,235 

16,991,680 

1,340,869 

32,108,807 

48,990,500 

803,250 

13,005,080 

10,274,896 

6,310,663 

30,393,889 

68,207,000 

331,430 

10,681,637 

12,262,357 

6,333,070 

29,608,494 

742,814,500 

10,316,642 

78,056,608 

318,743,177 

49,483,265 

456,599,692 

997,133,300 

149,557,472 

76,281,784 

140,129,457 

39,212,370 

405,181,083 

247,389,300 

14,285,954 

23,070,975 

59,682,381 

22,168,080 

119,207,390 

320,448,800 

9,232,278 

21,061,820 

48,388,902 

12,092,653 

90,775,653 

101,208,600 

4,373,583 

16,091,773 

39,541,123 

4,367,179 

64,373,658 

183,583,100 

4,190,036 

15,377,844 

45,688,503 

6,330,404 

71,586,787 

36,623,000 

63,714 

3,225,928 

12,945,378 

3,566,159 

19,801,179 

55,911,300 

633,657 

5,650,575 

16,238,811 

4,856,708 

27,379,751 

68,966,900 

60,000 

10,637,139 

20,696,421 

4,559,149 

35,952,709 

68,653,800 

54,300 

9,179,173 

18,026,587 

3,519,524 

30,779,584 

97,703,500 

68,528,324 

5,795,440 

3,991,706 

8,187,221 

86,602,691 

140,336,700 

84,799,699 

2,765,978 

20,085,608 

27,356,939 

135,008,224 

42,886,600 

77,200 

9,542,401 

5,685,702 

2,985,600 

18,290,903 

49,802,500 

25,277 

7,839,900 

8,496,050 

4,342,989 

20,373,319 

77,248,300 

2,506,133 

6,096,844 

25,527,443 

14,471,858 

48,602,278 

77,213,300 

3,810,149 

6,250,981 

15,584,850 

9,756,053 

35,402,033 

99,156,800 

1,542,200 

4,446,390 

53,041,026 

5,881,150 

64,910,766 

146,264,900 

1,735,100 

5,578,618 

48,235,859 

7,135,964 

62,685,541 

39,821,500 

3,578,358 

2,118,144 

18,001,897 

6,675,222 

30,373,621 

45,377,900 

3,964,444 

2,474,560 

15,477,025 

4,203,025 

26,119,064 

41,481,400 

2,616,607 

2,889,896 

30,299,686 

1,438,256 

37,244,446 

31,962,900 

4,450,200 

3,194,482 

17,064,080 

1,107,623 

25,816,385 

38,377,000 

122,672 

10,638,442 

21,678,843 


32,439,957 

54,852,700 

129,857 

5,660,970 

36,110,983 


41,901,810 

3,671,218,100 

140,211,551 

638,317,647 

1,366,063,015 

193,044,138 

2,337,636,351 

4,436,900,400 

304,225,633 

457,384,432 

1,109,994,854 

172,034,495 

2,043,639,414 

8,108,118,500 

444,437,184 

1,095,702,079 

2,476,057,869 

365,078,633 

4,381,275,765 



New Business 

and Gain of Insurance. 

Pro Rata Gain as Index of 
Business Stability. 

Ratio per $ 1,000 of 

New Business. 

Per Cent to Insur¬ 

ance in Force at 
Beginning of each 

Year. 

Gross New 
Business Paid 
for in Five- 
Year Periods 
beginning 

Jan. 1 , 1893 , 
Jan. 1 , 1898 . 

Comparative 

“ Size ” or Volume 

of same (Ratio of 
New to Old per 
$ 1,000 in Force at 

Beginning of each 

Year.) 

Gain in 
Insurance in 
Force. 

Ratio of Gain per 

$ 1,000 of New 

Business. 

Equation of same 

on basis of $100 of 

New Business per 

$ 1,000 of Old, giving 

Relative Value of 

Gain as in propor¬ 

tion to Volume. 

rcr icdioi Ail-com¬ 

pany Mean for re¬ 
spective periods 

1 (foot of preceding 

col'mn) giving Ratio 

denoting degree of 

Business Stability. 

$ 

% 

9 

$ 

$ 

$ 

9 

% 

611 

7.93 

87,944,300 

128 

17,883,432 

203 

159 

105 

352 

4.63 

120,376,000 

140 

60,620,167 

503 

359 

131 

571 

9.43 

31,381,200 

162 

10,719,871 

342 

211 

140 

480 

5.78 

31,178,100 

124 

12,291,208 

394 

318 

116 

568 

7.93 

7,891,700 

143 

2,258,006 

286 

200 

132 

440 

7.57 

14,853,400 

199 

7,998,262 

538 

270 

98 

546 

3.58 

50,022,400 

64 

—35,915 

— 

— 

— 

399 

2.45 

49,619,700 

62 

7,502,538 

151 

244 

89 

692 

9.94 

612,603,600 

135 

100,203,592 

164 

121 

80 

521 

7.26 

809,844,300 

155 

307,883,743 

380 

245 

89 

629 

8.54 

45,306,600 

132 

8,406,067 

185 

140 

93 

470 

5.78 

52,321,100 

131 

18,046,052 

345 

263 

96 

716 

15.40 

39,476,300 

197 

5,434,669 

138 

70 

46 

501 

8.40 

46,081,000 

185 

19,870,097 

431 

233 

85 

874 

13.23 

41,908,200 

137 

—5,115,064 

—122 

—167 

— 

676 

8.50 

42,259,100 

145 

8,821,329 

209 

144 

52 

522 

9.18 

77,701,700 

172 

30,578,163 

394 

229 

152 

406 

5.76 

94,256,500 

151 

46,757,222 

496 

328 

119 

641 

11.32 

758,003,700 

180 

189,822,298 

250 

139 

92 

461 

7.04 

881,418,000 

165 

405,146,278 

460 

279 

101 

591 

7.58 

137,028,900 

130 

37,615,741 

275 

212 

140 

428 

5.39 

172,863,900 

133 

74,588';280 

432 

325 

118 

623 

11.50 

59,354,200 

181 

17,984,727 

303 

167 

111 

457 

7.16 

76,130,500 

170 

88,209,877 

502 

295 

107 

620 

6.39 

53,154,600 

112 

14,017,833 

264 

236 

156 

434 

5.16 

70,743,500 

123 

29,323,017 

414 

337 

123 

615 

11.81 

741,078,300 

192 

187,772,296 

253 

132 

87 

406 

7.43 

1,165,264,900 

214 

676,607,101 

581 

271 

99 

482 

6.90 

238,832,200 

138 

100,568,767 

421 

305 

202 

283 

3.67 

339,225,300 

137 

207,599,913 

612 

447 

163 

636 

10.16 

103,873,200 

164 

30,048,149 

289 

176 

117 

390 

7.64 

212,267,200 

226 

120,918,206 

570 

252 

92 

541 

10.80 

39,531,800 

216 

15,471,763 

391 

181 

120 

490 

9.71 

57,554,400 

204 

23,372,995 

406 

199 

72 

521 

6.91 

67,509,300 

130 

23,928,195 

354 

272 

180 

448 

4.78 

72,162,700 

112 

29,094,345 

403 

360 

131 

885 

21.31 

100,477,400 

248 

8,041,127 

80 

32 

21 

962 

28.90 

149,278,900 

319 

5,704,820 

38 

12 

4 

427 

6.81 

42,359,800 

158 

20,894,181 

493 

312 

207 

409 

5.43 

54,028,500 

144 

26,981,850 

499 

347 

126 

629 

11.75 

71,738,000 

173 

18,078,077 

252 

146 

97 

458 

6.94 

79,226,100 

155 

31,278,611 

395 

255 

93 

655 

16.68 

110,334,200 

284 

41,673,796 

378 

133 

88 

429 

9.41 

147,904,200 

222 

69,209,558 

468 

211 

77 

763 

16.94 

40,186,000 

224 

6,649,890 

165 

74 

49 

576 

11.40 

45,981,500 

201 

14,175,251 

308 

153 

56 

898 

18.14 

35,131,700 

171 

—6,732,500 

—163 

—279 

_ 

808 

13.28 

36,594,400 

188 

6,463,110 

177 

94 

34 

845 

13.06 

36,976,700 

149 

—1,199,697 

—32 

—47 

_ 

764 

15.21 

62,217,200 

226 

10,668,652 

171 

76 

28 

637 

10.29 

3,629,806,000 

160 

875,967,464 

241 

151 

100 

461 

7.07 

4,883,650,400 

169 

2,259,031,48C 

463 

275 

100 

540 

8.49 

8,513,456,400 

165 

3,134,998,944 

368 

223 

100 


Note —All data prior to 1900 from Massachusetts reports, last three years from Comiecticut reports. 










































































































































Table II: — Experience of 1902 on same basis as preceding. 



Years ending 
Dec. 31 . 


Table III:_Annual Aggregates of All Companies and Grand Totals for Each Year and Five-Year Period. 


Gross New 
Business Paid 
for in Years 
1892 - 1896 , 
1897 - 1901 . 


1893 . 

1894 . 

1895 . 

1896 . 

1897 . 

1898 . 

1899 . 

1900 . 

1901 . 

1902 . 

Grand Totals j 
* Change from 


770.817.400 
821,810,000 

724.389.400 
707,247,600 
646,953,700 


3,671,218,100 

729,404,300 

770,123,800 

929,822,100 

957,050,600 

1,050,499,600 


4,436,900,400 


8,108,118,500 


Terminations Other Than by Death and Maturity. 

New Business and Gain of Insurance. 

Pro Rata Gain as Index of Business 
Stability. 

By 

Expiry. 

By J 

Surrender. 

By 

Lapse. 

By Change 
and Decrease. 

Total 

Terminations 
during Years 
1893 - 1897 , 
1898 - 1901 . 

0 a-g S 

o« 

0 to a <v 

O <V m <-> M-. 

*.S ° 0 ? 

£ pq a a -a 

a.” «— a 

0 £ y <u a 

Gross New 
Business 

Paid for in Years 
1893 - 1897 , 
1898 - 1902 . 

Comparative 
“ Size ” or 
Volume of same 
(Ratio of New’ 
to Old per 
$ 1,000 in Force 
at Beginning 
of each Year.) 

Gain in 
Insurance in 
Force. 

Ratio of Gain 
per $ 1,000 of 
New 

Business. 

Equation of same 

on basis of $100 of 

New Business per 

$ 1,000 of Old, giving 

Relative Value of 

Gain per $100 of 

Volume. 

C C 2 A 

0 ^ a 2 ** 2 * 

0 S a 2 v * 

grs»»a 

r 1 •*"* u a a — 

«* 

24,490,249 

29,613,880 

30,202,071 

27,175,021 

28,730,330 

$ 

109,696,235 

134,619,018 

133,254,047 

133,938,944 

126,809,403 

$ 

281,861,652 

323,067,109 

260,885,379 

258,141,618 

242,107,257 

$ 

33,777,566 

48,642,953 

35,377,951 

40,479,628 

34,766,040 

s 

449,825,702 

535,942,960 

459,719,443 

459,735,211 

432,413,035 

$ % 
584 10.83 

652 12.02 

635 10.03 

650 9.78 

668 8.99 

$ 

821,810,000 

724,389,400 

707,247,600 

646,954,700 

729,404,300 

$ 

198 

162 

154 

138 

152 

305,657,060 

122,656,788 

116,520,899 

111,613,550 

219,519,167 

• 

372 

169 

165 

172 

301 

9 

188 

104 

107 

125 

198 

% 

125 

69 

71 

83 

131 

140,211,551 

27,472,688 

30,760,511 

66,914,098 

85,396,878 

93,681,458 

638,317,647 

100,420,124 

98,569,753 

79,348,157 

85,342,804 

93,703,594 

1,366,063,015 

242,458,530 

216,398,212 

234,014,061 

204,589,143 

212,534,908 

193,044,138 

31,705,830 

35,701,228 

28,361,068 

31,503,475 

44,762,894 

2,337,636,351 

402,057,172 

381,429,704 

408,637,384 

406,832,300 

444,682,854 

637 10.29 

551 7.99 

495 7.17 

439 7.08 

425 6.62 

425 6.70 

3,629,806,000 

770,123,800 

929,822,100 

*957,050,600 

1,050,499,600 

1,176,154,300 

160 

153 

175 

166 

171 

176 

875,967,464 

287,628,148 

453,013,014 

*364,765,477 

530,175,285 

623,449,556 

241 

373 

488 

381 

505 

530 

151 

244 

279 

230 

295 

301 

100 

89 

101 

*84 

107 

109 

304,225,633 

457,384,432 

1,109,994,854 

172,034,495 

2,043,639,414 

461 7.07 

4,883,650,400 

169 

2,259,031,480 

463 

275 

100 

444,437,184 

1,095,702,079 

2,476,057,869 

365,078,633 

4,381,275,765 

540 8.49 

8,513,456,400 

165 

j 3,134,998,944 

368 | 223 

100 


Massachusetts to Connecticut reports. New business paid for on 










































































































































































































































